Fast fashion retail giant Boohoo has been hit with a lawsuit after allegations of modern slavery wiped over £1 billion from its shareprice. The investors argue that Boohoo failed to disclose labour rights violations at its suppliers’ factories and that it made misleading statements and failed to disclose the information about the matter to the market. Such a failure, they claim, was in breach of Boohoo’s obligations under the Financial Services and Markets Act 2000. Law firm Fox Williams is reportedly representing the group of 49 institutional investors who are seeking to recover damages.

The allegations of worker abuse emerged in a 2020 Sunday Times report where it was revealed that employees manufacturing clothes for Boohoo in a factory in Leicester, were being paid just £3.50 an hour as well as being forced to work during the Covid-19 pandemic without access to face masks or to personal protection equipment. A subsequent review by barrister Alison Levitt KC found that “Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance.”

Following the Sunday Times report, over £1.5bn was wiped from its market value. The lawsuit argues that investors who purchased shares in the years leading up to the 2020 report, therefore suffered huge losses as a result of the share price drop. The case will be closely followed as it examines the role of ESG factors in corporate governance disclosures in the securities industry.

Boohoo have denied the allegations and issued the below statement;

“We have been made aware of a claim that is being brought by certain shareholders. The company strongly contests the allegations and will vigorously defend any claim.”